I'm getting spooked about the markets

[Oz investor]

Personally I ignore forward P/Es as they are wild guesses.

i use P/Es based on historical earnings as a filter when scanning for new targets but it is one of several parameters used to thin potential targets before serious research and thought is undertaken

caution :- use of historical based P/E has it's own traps waiting in ambush

 

[sengsational]

Talking about how to get the P/E back into more comfortable territory without a crash...

Wouldn't one way to go into a period of stagflation? That prospect is at least as bad as a crash, I think. This scenario has the "E" getting inflated, not by increased productivity but instead by inflation alone, but the market ("P") just sits there.

 

[Oz investor]

Talking about how to get the P/E back into more comfortable territory without a crash...

Wouldn't one way to go into a period of stagflation? That prospect is at least as bad as a crash, I think. This scenario has the "E" getting inflated, not by increased productivity but instead by inflation alone, but the market ("P") just sits there.

i am not a US resident but in Australia , our 'growth- inflation' looks very much like taxflation , because many taxes are indexed on the CPI ( which is affected by various indexed taxes .. tobacco , fuel , alcohol , various levies all the subject to a goods and services tax .)

so stagflation in Australia would actually be deflation + taxes so the P doesn't move without a lot of extra effort

i bet the global economists would LOVE to hear any idea that would actually work

 

[COcheesehead]

Interesting article on strong mid term years like we are in and what happens the year after.

Almanac Trader — Strong Midterm Years Weigh on Following...

 

[Chuckanut]

Vanguard seems to think the USA will see 3-4% growth in the stock market over the next decade. Internationally they are seeing 6-7% stock growth.

https://personal.vanguard.com/pdf/ISGVEMO.pdf

There is a chart on p. 24.

 

[audreyh1]

Vanguard seems to think the USA will see 3-4% growth in the stock market over the next decade. Internationally they are seeing 6-7% stock growth.

https://personal.vanguard.com/pdf/ISGVEMO.pdf

There is a chart on p. 24.

Nominal, I see according to that page. Thanks.

FWIW, expected returns is the proper term.

 

[kcowan]

/http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html has a nice spreadsheet http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls
The data is annual, which was fine for my purpose when I built my S&P500 backtester

I get page not found on both your links?

 

[pb4uski]

Well I used what I could find. Can you point me to a total return chart for the S&P500 starting at Jan 1, 1998? Thanks.

Here are a couple using VFINX as a proxy.

https://www.portfoliovisualizer.com...ividends=true&symbol1=VFINX&allocation1_1=100

https://quotes.morningstar.com/char...dDay":"07/31/2018","chartWidth":955,"SMA":[]}

 

[brucethebroker]

I'm so far over the edge I'm starting to distrust the Stable Value fund in my 401K as it is mostly insurance company wrap contracts. I'm going to take 1/2 of it off the table, roll it into an IRA and just CD it.

I see nothing wrong with your plan.

 

[Oz investor]

my concern is if there is a meltdown ( in my lifetime ) where is a safe place to hide , there are plenty of triggers and plenty of bubbles this time and one could even suggest resources are in a false recovery scenario .

 

[corn18]

my concern is if there is a meltdown ( in my lifetime ) where is a safe place to hide , there are plenty of triggers and plenty of bubbles this time and one could even suggest resources are in a false recovery scenario .

I would guess that value will find its way towards growth the soonest after a bear market. Seems investors always find religion after a bear attacks.

 

[Oz investor]

i am in theory a Taoist ,(pre-Confucius )

however i have investments in the gambling and alcohol industries ( and debt collection that might do well also )

i expect to take a nasty hit in asset valuations but am hoping for an 80% survival rate of investments ( by number of positions held )

( in the chaos there will be opportunities )

“I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”
― Warren Buffett

i have noticed idiots do tend to cluster in cosy chairs ( especially in bull markets )

hopefully tough times will see some (useless ) heads roll

 

[target2019]

I get page not found on both your links?

This worked for me:
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

This source is also a good one:
Simba's backtesting spreadsheet [a Bogleheads community project]
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=2520

The backtesting tool is a spreadsheet to backtest portfolio returns from 1972 to present [1985 to present if you want to include certain Sector/Tax-Exempt funds that started after 1985] of various Vanguard Mutual Funds. This tool is customizable and you can add the returns for any mutual fund.

Simba's backtesting spreadsheet [a Bogleheads community project]
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=2520

Please go to last page to find latest rev...

 

[kcowan]

Here are a couple using VFINX as a proxy.

https://www.portfoliovisualizer.com...ividends=true&symbol1=VFINX&allocation1_1=100

https://quotes.morningstar.com/char...dDay":"07/31/2018","chartWidth":955,"SMA":[]}

Thanks. Those are great tools to tuck away for other analyses.

 

[kcowan]

This worked for me:
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

This source is also a good one:
Simba's backtesting spreadsheet [a Bogleheads community project]
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=2520

Simba's backtesting spreadsheet [a Bogleheads community project]
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=2520

Please go to last page to find latest rev...

Yes me too. Thanks.

 

[copyright1997reloaded]

my concern is if there is a meltdown ( in my lifetime ) where is a safe place to hide , there are plenty of triggers and plenty of bubbles this time and one could even suggest resources are in a false recovery scenario .

Food, guns, and ammo. Things you can eat or use to acquire things to eat.

 

[trumpeting_angel]

I'm spooked, too, but largely because I'm in the process of cutting back and hoping to retire completely. Most of my money is in Vanguard Target 2020 - last year I moved it back from Target 2025 as a way of getting more conservative. But I don't want to end up being one of those people who retires just in time to see my investments tank!

I moved about 10% of my portfolio to VG Life Strategy Conservative Growth - 40/60. I have a couple of 401(k)s that need moving into VG to consolidate, and I need to put some into cash. I'm not ready to start withdrawing (I'm 65, plan to take SS at 70, and have a rental property that should produce a little income at 72 when the mortgage is paid off). And I can always keep on working, or cut back to just consulting - there's always more work there than I want to do. But mostly, I don't want to take a beating in the market at this age.

Any thoughts?

Signed,
A little nervous in Vermont

 

[corn18]

I'm spooked, too, but largely because I'm in the process of cutting back and hoping to retire completely. Most of my money is in Vanguard Target 2020 - last year I moved it back from Target 2025 as a way of getting more conservative. But I don't want to end up being one of those people who retires just in time to see my investments tank!

I moved about 10% of my portfolio to VG Life Strategy Conservative Growth - 40/60. I have a couple of 401(k)s that need moving into VG to consolidate, and I need to put some into cash. I'm not ready to start withdrawing (I'm 65, plan to take SS at 70, and have a rental property that should produce a little income at 72 when the mortgage is paid off). And I can always keep on working, or cut back to just consulting - there's always more work there than I want to do. But mostly, I don't want to take a beating in the market at this age.

Any thoughts?

Signed,
A little nervous in Vermont

If you've won the game, you don't need to play anymore. Do you have enough to retire? Do you need any returns on your investments in order to retire?

It looks like you can always work some if the sequence of returns risk hits.

 

[copyright1997reloaded]

And....the S&P 500 has just hit a new all time high. The end of January/early February sell off is now history.

http://www.early-retirement.org/forums/f44/im-getting-spooked-about-the-markets-93245-8.html#post2094428

 

[W2R]

And....the S&P 500 has just hit a new all time high. The end of January/early February sell off is now history.

http://www.early-retirement.org/forums/f44/im-getting-spooked-about-the-markets-93245-8.html#post2094428

Oh!! How exciting! My portfolio is not yet at its all time high (January 28th), but maybe it will get there before too long.

 

[trumpeting_angel]

If you've won the game, you don't need to play anymore. Do you have enough to retire? Do you need any returns on your investments in order to retire?

It looks like you can always work some if the sequence of returns risk hits.

The sequence of returns is what I'm worried about. With a very modest ROI, I do have enough to retire, according to FIREcalc, ORP, newretirement, Vanguard's calculator, and a handful of others. But the COL here has turned out to be higher than I anticipated (just moved to Vermont), DH's income varies (he's younger and will keep working), and I tend to be on the anxious side.

I'm fortunate that I can keep working. If my SS and my rental income started earlier, I wouldn't have to take withdraw much in the beginning. I think that's what spooks me: going from saving so aggressively to living on savings for several years before SS & rental income get going. If the market drops deeply in the few years, I'll be back behind the desk in no time. Grumble. Who hid the crystal ball?

 

[pb4uski]

It is not uncommon for early retirees to have high WRs before SS and/or pensions start. Ours started high... declined when I started my pension and will decline much further once we start SS. IMO, it is only that ultimate WR that counts.

If you take your spending gap once SS and rental income have come online, divided by your nestegg less your spending gap from now until then, what is your WR? IMO, if you are 72 at that point but that ultimate WR is 4% or less, then you have no need to worry.

ETA: Couldn't find this before but this is what I was trying to explain above... except in your case adjust for both SS and your rental income.

Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.

Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.

Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.

Scenario age 70. You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.

The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.

No need for any stupid 'break even analysis'.

If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.

 

[Archman]

Since investing in 1986, I never sold due to market downturns. I rode it out. Starting this year we had to take an RMD, which we didn't need. Usually, we can get by with social security and a pension.Since our saving account was getting bigger and bigger, especially with the RMD, we decided to start investing about 10% of our monthly income into the stock market. IMHO, I think the market has more room for growth. If the market would crash completely, we'd lose about 50%, since half of our assets are in annuities.

 

[ncbill]

The sequence of returns is what I'm worried about. With a very modest ROI, I do have enough to retire, according to FIREcalc, ORP, newretirement, Vanguard's calculator, and a handful of others. But the COL here has turned out to be higher than I anticipated (just moved to Vermont), DH's income varies (he's younger and will keep working), and I tend to be on the anxious side.

I'm fortunate that I can keep working. If my SS and my rental income started earlier, I wouldn't have to take withdraw much in the beginning. I think that's what spooks me: going from saving so aggressively to living on savings for several years before SS & rental income get going. If the market drops deeply in the [next] few years, I'll be back behind the desk in no time. Grumble. Who hid the crystal ball?

https://www.kitces.com/blog/should-...is-a-rising-equity-glidepath-actually-better/

https://www.onefpa.org/journal/Pages/Reducing Retirement Risk with a Rising Equity Glide Path.aspx

 

[Archman]

I wish that crash would hurry-up and happen, because I've had $100k in cash I've been wanting to invest since 2013! At least I've been sleeping well the last 5 years.

Too bad. The S&P is up 72.1% the last five years.